Shady debt-collection tactics on rise, study finds

More Americans are complaining that debt collectors are using shady and possibly illegal practices to hound them for payments, an investigation has found.

Scripps Howard News Service

More Americans are complaining that debt collectors are using shady and possibly illegal practices to hound them for payments, an investigation has found.

Complaints in 2009 to federal authorities about unscrupulous debt collectors are on pace to be more than 6 percent higher than two years ago. According to an analysis of Federal Trade Commission data, Americans levied nearly 228,000 objections about debt collectors from 2007 through this May, the last full month for which Scripps Howard received records.

Driving the increase are more aggressive collection tactics, a jump in the number of people falling behind on bills, lax requirements for collectors to prove that money is actually owed and booming growth in the debt-resale market, say consumer advocates, federal officials and industry experts.

"They're bullies and thugs," Jane Santoni said about the industry. Collection tactics have gotten more aggressive during the recession, said Santoni, a Towson, Md., attorney who has represented 50 people in disputes against collectors over the last seven years. "They need to be stopped."

A Scripps Howard study found:

The volume of debt-collection complaints has risen during the recession, dominated by charges that collectors misrepresent debts, contact other people repeatedly and fail to send written notice — practices forbidden by federal law. A booming debt-collection industry that's feasting on rising consumer credit default rates and is seeking easier ways to contact people on cell phones. A weak law-enforcement system, in which collection companies face scant threats if they're caught breaking the law.

The rise in complaints comes as Americans say that they're being contacted more frequently by debt collectors, frequently before 8 a.m. or after 9 p.m. — times prohibited by law.

Many of the allegations of abusive collection tactics would violate the 1977 Fair Debt Collection Practices Act, which prohibits deceptive and harassing behaviors.

"They know what buttons to push on people to get them to pay, even when they don't think they're going to pay," said Ira Rheingold, executive director of the National Association of Consumer Advocates, a Washington-based advocacy group.